KGI Asia Commentary

Hang Seng Index rose 152 points on Wednesday

The Hang Seng Index rose 152 points or 0.8% to 19,252 on Wednesday. HSTECH rose 86 points or 2.3% to 3,921 and HSCEI rose 61 points or 0.9% to 6,541. Daily market turnover was HK$86.7bn.

Dow ends higher as energy gains help offset tech losses

The Dow Jones Industrial Average closed higher on Wednesday, led by gains in the energy and materials sectors, but technology stocks cooled their recent gains ahead of the Federal Reserve's interest rate decision next week. The Dow rose 0.3 percent and fell 91 points, the Nasdaq fell 1.3 percent and the S&P 500 fell 0.4 percent. Energy stocks led the market higher, extending recent gains, as oil prices continued to rise after Saudi Arabia's recent decision to cut output and Wednesday's data showing an unexpected drop in U.S. weekly crude stockpiles. Materials stocks, led by Caterpillar, also led the broader market higher. However, an Alphabet-fueled decline in tech stocks capped gains, with investors appearing to be taking some profits on tech stocks after their year-to-date gains of more than 30%. Amazon also weighed on shares despite reports that it was planning to roll out an ad-supported tier to its Prime Video streaming platform. Warner Bros. and Paramount Corp. both gained 8% on reports that both are in talks with Amazon to add ad-based streaming services through Amazon's Prime Video channel. Affirm Holdings was also higher on news of Amazon, which announced that it will offer adaptive checkout to merchants using Amazon Pay, allowing their customers to choose a personalized payment method. On the earnings front, Campbell's quarterly results topped Wall Street expectations, but the consumer staples company reiterated that its guidance was below expectations, sending its shares down nearly 8%.

Yellen says U.S. inflation has eased as growth in some sectors slows

U.S. Treasury Secretary Janet Yellen said on Wednesday that the U.S. economy is strong due to strong consumer spending but is slowing in some areas, adding that she expects to continue making progress in reducing inflation over the next two years amid a strong labor market. In an interview with CNBC, Yellen also said that while banks may struggle with commercial real estate and face some consolidation, there is ample liquidity in the financial system and banks in general should be able to withstand any stress. Banks will face some commercial real estate-related difficulties as rising interest rates and remote working arrangements reduce demand for office space, but stress tests show banks are well capitalized and banking regulators are watching the situation closely, she said. The economy has slowed somewhat, easing pressure on the labor market, but "our labor market remains very healthy with significant wage growth," she said.

Hong Kong Stock Connect had a net inflow of HK$0.24bn on Wednesday, of which Sinopec (386) had the largest net inflow, reaching HK$0.19bn; followed by Kuaishou (1024). Meituan (3690) recorded the largest net outflow at HK$0.30bn, followed by CCB (939).